The BSE auto index rose for a sixth straight session to a new all-time high, on expectations sales will improve after an interest rate cut is seen bringing down the cost of loans. The BSE auto index closed up 2.3 percent, making it the top performer among sectoral indices.Auto shares led gains on optimism for improved sales, especially after the Reserve Bank of India’s aggressive rate cut this week is expected to reduce the cost of loans to purchase vehicles.
Stocks like Maruti (3.64 percent), Tata Motors (2.87 percent),Hero MotoCorp (3.15 percent) were some of the top performers in the auto index. Maruti gained as its new product - Ertiga got a good response from the customers.
Production has also normalised at India’s biggest car maker Maruti Suzuki after recent labour unrest, which is also contributing to the gains in the sub-index.
“With production restored at Maruti , and with interest rates going down, car makers are expected to post 14-15 percent sales growth i n FY13 over FY12"said Yaresh Kothari, sector analyst at Angel Broking.
“Maruti, Tata Motors are expected to be the main beneficiaries of RBI’s cut” Kothari added.
Tata Motors rose 2.5 percent, while Maruti Suzuki(MRTI.NS) advanced 2.1 percent. The BSE’s auto index has risen over 30 percent in 2012, compared to a 12.5 percent rise in the Sensex.
With inputs from Reuters
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